The 2018 Ross-CASE Report: Reasons for Optimism Looking Beyond This Year’s Data?
Total new funds secured may have fallen, but there may be more positives for university fundraising than the headline figure suggests
As advancement professionals prepare to gather in Edinburgh for CASE’s biggest European conference to-date, how will you translate the results of this year’s Ross-CASE report to help shape the conversations you will have and determine the must attend sessions?
Last month [July] saw the publication of the 2018 Ross-CASE report into the state of university fundraising in the UK for the 2016–17 period. The number on which most commentators seemed to focus was the 12% drop in the total amount of new funds secured, but how concerned should university fundraisers and administrators really be about this figure?
Obviously, any decline in a funding source will be of concern to the institutions who depend on those sources of revenue, but what is the significance of a drop in one key performance indicator from one period to another? Are we able to gain further insight by looking at the data from previous reports and what can we understand by looking beyond this headline number?
Ross-CASE 2018 — regression to the trend?
Prior to 2016–17, the total new funds secured had increased each year since the 2012–13 period. From the period 2014–15 to 2015–16, the total new funds received increased by 23%. This level of growth suggests that the 2015–16 period was a banner year for university fundraising and perhaps one that may not have been representative of the underlying trend in donations.
Looking at the recent data along with the figures from previous years’ reports, it does appear that the 2015–16 figure is considerably above what we might expect to see if we look at the trend in donations over a longer period:
The dashed line in the above figure shows the trend for the sum of new funds received, as reported in historical Ross-CASE reports, from the 2010–11 report onwards. This trend suggests that the total new funds secured has been increasing by around £60 million each year over this period.
Looking at the amount of new funds secured since 2011, it appears that the figure for 2015–16 was considerably above the expected level of growth, with a decline in donations in 2016–17 perhaps being explained by the pattern of growth regressing back toward the trend.
Cash income received
Although there has been a drop in new funds being secured, total cash income received has continued to increase:
While this finding is encouraging, its continuing growth may be due to a lag between new funds being secured, and those being realised as cash income in following years. It will be interesting to see where this metric goes for the 2017–18 period following the recent drop in donations.
Are donations moving toward fewer institutions?
If we compare the mean new funds secured to the median new funds secured over time, we see that the mean figure is growing considerably faster than the median, with the median value having remained somewhat flat since the 2014–15 period.
Without looking at the non-aggregated data, it could be easy to over-interpret this finding, but the mean being higher than the median tells us that the distribution of donations is skewed to right, suggesting that, while there has been a steady growth in donations, these donations aren’t being equally shared across the cohort of institutions.
What has driven the fall in new funds secured?
Looking at the last three reports and breaking up the new funds secured by funding source, we can see that the biggest change in new funds secured was a large increase in donations from organisations from 2014–15 to 2015–16, with the amount of new funds increasing from £355 million to £584 million.
Donations from individuals also grew in this period but, while donations from individuals remained relatively flat from 2015–16 to 2016–17, dropping by less than 1%, funding from organisations fell by over 12%.
The figures by university cluster also provide some additional insight into the decline in new donations. In the 2015–16 period, the mean amount of new funds secured by the Elite cluster was £242.8 million. In the following period this fell to £214.5 million. As there are two universities in this cluster, the combined fall in new donations is over £56 million. This accounts for over 70% of the total drop in donations seen between these periods across all institutions.
Cairney & Company’s take home messages
While the news and the blog posts may have focussed on the headline drop in new funds secured against the previous year, looking at the trend in donations might suggest that, while there might be cause for concern, there may well not be any cause for panic.
A fall in the value of the major KPI will always set alarm bells ringing, and a 12% drop is a certainly something of which to take notice, but the data for the last few years show a significant upward trend in the sum total of new funds received.
The survey period 2015–16 appears to have been particularly strong, with new funds secured going significantly beyond what would be expected by the observed trend, with a 23% increase on the previous year: a level of growth that was unlikely to be sustainable. This year of outlying performance may well have been driven by large donations to universities in the Elite cluster, which were not equalled the following year and which drove the majority of the fall in donation amount described in the current report.
Given the relatively small number of institutions in the report, changes in the participation of institutions, particularly those at the extremes of the distribution, may have a large effect on the reported figures. Additionally, significant, one-off gifts or large donations for large capital projects can skew the findings year on year. This is mentioned in the foreward of the report:
“Indeed, new philanthropic funds have grown nearly every year (and when the upward trend was disrupted, it was due to a few mega-gifts being achieved in the previous year)”
While the sum of new funds secured has dipped, the total cash income received has continued its upward trend. Given the previous year’s amount of new funds secured was so high, this is perhaps not surprising, as those new funds secured continue to be realised, so it will be interesting to see if the total cash income received falls, or grows at a slower rate, in future years.
In summary
Total new funds secured dropped by 12%
This decline was predominantly driven by a drop in donations from organisations
Over 70% of the fall in total new funds secured is due to a drop in donations to the Elite cluster of universities
Changes in the mean versus median figures suggest that more and / or larger donations could be moving to fewer institutions
Analysis of the trend for the past several reporting periods suggests an annual growth of new donations of over £60 million
Cash income received continues to grow
The fall in new funds secured was perhaps the first message in the 2018 Ross-CASE report that university fundraisers saw, but further analysis of figures and the longer-term trends may suggest less cause for pessimism.
It is perhaps too early to say that donations to universities are falling, and many fundraisers and university administrators may already be awaiting next year’s report to see if the 2016–17 result was a chance event, or the start of a decline.